Buy or Rent - Mortgage Advice

Should I buy or should I rent?

Buying a property is a massive commitment. But paying rent into a deep well, from which you get nothing back is not the most sensible idea either. One day in your life, you may get fed up of lining your landlord's pockets month after month. Or maybe it'll never happen, maybe you'll always prefer the lack of hassles involved in renting. Look at it this way, apart from your contract there are no ties, no responsibilities and you don't have to worry about negative equity.

Young people starting out in new careers prefer renting it is cheap and cheerful, with some places coming already furnished and also have the ability to move wherever you would like, subject to your contract. You have no liability for the maintenance of the property, so if the gas boiler breaks down, your landlord pays for repairs. Sometimes, you can get deals whereby your rent includes all bills apart from the phone bill, so you don't even have to worry about leaving lights on. Also, you can live anywhere you want to, since should you not be able to afford to buy in an area, you can still probably rent there.

But renting isn't the ideal solution for all. You may be able to get good deals from landlords, but in the long run it is more expensive than buying a house. Each month you pour your hard earned income down a drain, instead of using it to provide security for the future.

70% of homes in this country are privately owned and not for no reason. Buying a home is a good investment, as the value of the property should rise. Also, once you have paid off the loan you used to buy the property, you have a roof over your head for the rest of your life. If you don't buy a home, when you reach retirement you'll have to pay rent on your pension, which could be very difficult. So in the long term buying is cheaper than renting, especially when you buy with a partner and since every payment goes towards owning a home, you aren't "losing" the money.

However, buying a home comes with a large range of expenses. You need to save for a deposit, dependent on the value of the property and the lender's rules for loan-to-value. The larger the deposit you put down, the better, both for your peace of mind and for the range of mortgage deals you can get. Other costs include solicitor's fees, valuation fees, surveys, insurance, MIGs and stamp duty as well as furnishing the property. These costs run into the thousands, and if someone breaks into your property you will have to fix it. Do you want that commitment?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

© AskFinancially.com 2009

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